Debt is a super-tool of modern economics, transferring wealth from the 90 percent to the one percent.

Now, most consumers own debt. In fact, it would not be an exaggeration to assert that half the population of democratic western countries are submerged in debt.

The United States is the great model of a society driven by debt, in spite of its status as the world’s largest economy. It was discovered in a recent survey that 50 percent of the US population would be unable to cover a $500 emergency expense.

But here is the crux. Debt drives the US economy in every way imaginable. The US national debt is over $22 trillion, which is 110 percent of US gross domestic product.

However, the US dollar is the world’s reserve currency, and the Federal Reserve can print cash at will — or so it would appear — to cover interest payments on that national debt.

United Kingdom national debt stands at approximately $1.9 trillion. This is 88 percent of GDP. Again, UK debt is sustainable owing to the fact that the Bank of England too can print money through the sale of bonds and various treasury instruments.

Who owns this debt? Or, better stated, to whom is this debt owed? The simple answer is the wealthy.

When consumers borrow, whether it is through bank loan, mortgage or credit card, that cash is loaned by middlemen called banks and similar institutions.

Banks are businesses too, and are owned by shareholders, investment funds and various stockholders. So when consumers borrow at interest, the bank profits go to the ultimate owners, who are usually wealthy investors.

And that is how the global economy operates to the benefit of the super-wealthy.

Debt is the vehicle through which the one percent put cash into the pockets of the 90 percent — consumers — to buy the goods and services that the one percent produce.

Austerity’s arrival

With the onset of austerity in 1980, supply-side economics drove deregulation and rent seeking.

Consumer credit became the means through which businesses sold their products and services as the public sector shrank, with public sector workers — the largest consumer group under the Keynesian economy of the 1960s and 1970s — placed on the unemployment line.

The consumer boom was widely encouraged with borrowing, driving a new culture of ostentation further driven by retail services.

However, with the consumer boom came rising debt, which had to be paid for in interest payments.

Interest rates were the means by which cash was transferred from consumers to wealthy investors.

As wealthy investors ploughed their cash into the expansion of their businesses, such as IKEA, Hilton, Koch, Apple, Microsoft, Walmart and Amazon, the returns on investment were twofold: profits from basic transactions, and profits from providing consumers with the cash to buy their products.

The one percent grew wealthier by the day, while Jack the Consumer appeared to be living a great life in a large home, with sports utility vehicles and annual vacations in Barbados and the Bahamas.

The reality was that this was a life financed by debt, and Jack and Jill were always one paycheque away from the poorhouse.